CBP Expected to Allow for FTZ Storage While Admissibility Determined on Goods Stopped Under WROs

CBP is expected to officially allow for the use of foreign-trade zones for goods stopped under a withhold release order while an importer works to prove forced labor was not involved in making the imported product, said Christopher Smith, a trade adviser in the Customs Coordination Center for North America for IKEA Purchasing Services. Smith, also a National Association of Foreign-Trade Zones board member, spoke Feb. 9 during a NAFTZ virtual conference. “We believe we are very close to getting a letter in hand allowing for the use of zones to store product while a company will be able to argue whether or not there is forced labor associated with that product associated with a WRO detention,” he said.

A CBP official said at another NAFTZ event in October that it was unlikely to allow for FTZ storage while the discussions over admissibility were ongoing (see 2010270054). Soon after that event, FTZ program members asked CBP “Why if FTZs are a type of bonded facility wouldn't you allow it?” and CBP seems to have since changed its mind, Smith said. CBP didn't comment.

The trade group is continuing to work with CBP on a related question on how the agency treats goods that are subject to a WRO but were admitted into the FTZ prior to the WRO issuance, he said. In such cases, the importers would need CBP approval before being allowed to withdraw them, he said. The group would like to see a role for FTZs regarding “existing inventory” included within forced labor legislation being considered, though specific language was not included in the latest iteration introduced last month by Sen. Marco Rubio, R-Fla. (see 2101290045). “We are still working as an organization to try and get those concerns addressed,” Smith said.

The increased U.S. government focus on forced labor in recent months has industry wishing it had more guidance from CBP on how to rebut suspicions when a shipment is stopped as a result of a WRO, said Jonathan Gold, head-government relations for the National Retail Federation. The agency's forced labor website includes some “helpful hints,” but “we certainly think we need more than helpful hints to be able to provide individuals and companies the opportunity to prove that their products are not made with forced labor,” he said. The NRF and other trade groups have provided CBP with some frequently asked questions that it would like the agency to provide the answers for, he said. The agency has increased the number and breadth of WROs issued in recent years.

Among the open questions is “What are the impacts of WROs on products” in FTZs, Gold said. Following the announcements of WROs on cotton from Xinjiang Production and Construction Corps (see 2012020071) and China's entire Xinjiang region (see 2101130053), there were questions about “if you had product that was on the water or in a zone and not entered yet, is that product caught up in the WRO?” he said. CBP provided some unofficial guidance on that question, Gold said, but CBP should address the issue within a FAQ document, he said.

Rubio's bill included some welcome changes from the version introduced last Congress, Gold said. For example, the new legislation calls for a “transparent and shared risk-based approach that needs to be developed by” CBP along with “stakeholders,” he said. Some implementation timelines would also be pushed back so that CBP has the time “to build such a program and the companies have the time to identify what needs to be done,” he said. Gold said industry representatives sent a letter to House and Senate leaders right around the same time Rubio's bill was introduced. The letter spelled out “the key issues” that would need to be addressed if a bill does go forward, he said.